Physical World

Colonial Presents First Webinar on Plastics Trends - Page 2

Physical World

Issue: 3Q15 Letter from Bryan Ekus, President, Colonial Purchasing Co-op Colonial Hosts Hamburg Meeting Well summer is here, and we’re still scratching our heads Hamburg – The night before the Media-Tech conference here as to why the raw material suppliers are having such on May 18, Colonial hosted a meeting for 22 European friends diffi culties delivering materials and keeping prices under and acquaintances. Colonial president Bryan Ekus detailed control? We hear that this likely since most material Colonial’s activities and plans in Europe. Erik van Stiphout, Symcon and Process Technologies & Services (PT&S), then made a is going to China, the Euro declined and there were presentation of his company’s global capabilities. (see page 3) planned maintenances that have shorted the market. (L-R) Laji Lali, The Masters Group, John Fitzgerald, EDC, Dieter Lubberich, Cinram, I usually don’t jump on the conspiracy bandwagon but are these Albert Gamper, Sony DADC, and Erik van Stiphout, Symcon really unlucky accidents? Or, has someone fi nally found a way to increase margins in physical media? I am going to yield to the side of optimism on the chance that we will also fi nd a way to be more profi table. On page 2 of this newsletter, read more about Colonial Purchasing’s fi rst webinar, which is available online for replay, in which IHS Chemicals experts explained the changing dynamics of the petrochemical market and impact on prices for polymers – obviously a lifeblood of our industry. I look forward to your feedback. Bryan

Some DVD, Blu-ray Patents Expiring This Year Manufacturing physical media requires tangibles like technology, materials and equipment, as well as intangibles like patent royalties. Fortunately, there are parameters to license agreements, and some of DVD6C those related to DVD technology will be expiring in the U.S., as Colonial Navigating the relevant patents is a complex process, which is why Purchasing Cooperative has learned from representatives of various most holders have pooled their interests within various royalty patent groups, who agreed to answer Physical World’s questions. collection groups, such as the DVD6C on whose website But none of the organizations would disclose any ﬁ nancial information, (http://www.dvd6cla.com/list.html) speciﬁ es which patents by pool such as how much money has been collected to date from such patents, member and the expiration date by country. or future savings by licensees as the result of the expirations. For example, among the dozens listed for a DVD-Video disc, Toshiba’s patent No. 5,774,441 is set to expire in the U.S. on June 30, 2015. In contrast, Panasonic’s No. 5,734,788 will expire in August 2016. There are patents in various stages of coming due for other varieties of discs including: DVD-ROM, DVD-Audio, DVD-R, DVD- RW, DVD-RAM, DVD+R, and DVD R+W. So if you’re involved with manufacturing any of these pre-recorded and blank media formats, it behooves you to examine closely the list [and website links of all the patent groups], as well as your own agreements, if you indeed signed one. continues on to p3

Platinum Sponsor Silver Sponsors Copper Sponsor P.2 Physical World Issue: 3Q15

Colonial Presents First Webinar on Plastics Trends Colonial Purchasing Cooperative presented on May 11 the fi rst of planned webinars dealing with topical issues facing the media industry. Hosted by IHS Chemicals and Colonial Purchasing, the online event Blanchard noted that 95% of PC production comes from the Top focused on the changing dynamics of the petrochemical market 10 producers, of which No. 1 & 2 – Bayer and Sabic – account for and impact on prices for polymers – specifi cally polycarbonate 55%. He added that some new Chinese companies are entering (used in optical discs) and Polypropylene (used in DVD cases). the market using diff erent technologies in a region used to IHS directors Paul Blanchard and Joel Morales explained why: historically low margins. Some producers are taking the relatively slow growth and new competition as a reason to reduce their • Cheaper oil doesn’t mean cheaper polycarbonate? polycarbonate capacity. • The weak Euro makes it diffi cult for traders to source material? Geography plays a role, he pointed out. Asian prices have been • The availability of raw materials for physical media has tightened the lowest and North America the highest, while Europe has seen so severely? a decline due to the unfavorable exchange rate with the Euro. “Everything plastic (such as optical discs and packaging) is “Tighter supplies lead to a seller’s market,” Blanchard summed up dependent on petrochemicals, oil and natural gas liquids,” the PC landscape. Blanchard explained. IHS’s Morales noted that polypropylene producers have seen an Benzene prices, for example, have recently started to rebound increase in margins, and in North America growth has been good. following a period of very low prices. Meanwhile, “polycarbonate “Meanwhile in Asia there is more additional polypropylene suppliers have not passed all of their savings along the value chain capacity coming on stream than demand growth. Due to in order to restore margins that have eroded globally during the tight supply and demand dynamics in the domestic market past three years… Demand for polycarbonate is relatively inelastic North America producers don’t have to play in that sandbox,” in terms of price,” Blanchard said. Morales said. “It’s a partly cloudy sky for polycarbonate (PC),” Blanchard said. The webinar is available at: http://tinyurl.com/qgd57de “Growth in step with global GDP growth is expected for the next couple of years and this will occur mostly in China.” However, North Paul and Joel can be contacted at [email protected] and America pricing has been fairly stable since 2010. [email protected] for more details.

Member News CD Video Mfg. Betting On Bullish Future, Doubling Blu-Ray, DVD Disc Output Colonial member CD Video Manufacturing, Inc., located in the heart of California’s Orange County, CD Video Manufacturing, recently expanded substantially its DVD and Blu- ray capabilities, reports Charles Schredder, the replicator’s Vice President of Sales and Marketing. Purchasing a second Blu-ray line, stampers and packaging equipment, CD Video Manufacturing nearly doubling its Blu-ray and standard DVD daily replication volumes. CD Video Manufacturing is poised to buy a third Blu-ray line, focused on becoming an advanced optical disc manufacturing company dedicated to eﬃ ciency and high quality standards. “The Blu-ray stamper really sets apart from CD Video Manufacturing the competition,” Schredder remarks. 12650 Westminster Ave. Current customers include Fortune 500 companies, Santa Ana, California. 92706 independent producers, advertising agencies, Oﬃ ce: 714-265-0770, Ext. 205 magazine publishers and religious organizations. BLU RAY/CD/DVD Licensed “We’re looking for good salespeople,” Replication Schredder adds. cdvideomfg.com P.3 Physical World Issue: 3Q15

Some DVD, Blu-ray Patents Expiring This Year - continued from p1

MPEG LA AACS One-Red MPEG LA off ers licenses of convenience An AACS spokesperson explains the group A DVD disc’s numerous varieties in terms under patents that are essential to was founded by a group of stakeholders of functionality (e.g., -ROM) or construction various Standards, explains an MPEG LA in the Blu-ray ecosystem who collectively (e.g., single layer vs. double) also come spokesperson. “The patents included in its wanted to facilitate the consumer adoption with a multitude of patents. In 2012, a new licenses and their expiration dates are a of the Blu-ray format. “As such, the founders collection body representing the patent matter of public record,” the spokesperson agreed to develop an innovative encryption interests of Philips, Sony, Pioneer, and LG added, “but for easy reference, the lists of technology to protect the Blu-ray content, formed known as One-Red. patents in our MPEG-2 License, AVC License, then to license that technology to all As with the other collection agencies, One- VC-1 License and MVC License can be participants in the Blu-ray ecosystem on a Red has numerous expiring patents in the found in the corresponding sections of our cost recovery basis.” U.S. during the next 18 months that are too website.” Licensing the technology in the AACS case numerous to list specifi cs here. As can be ascertained from the link means licensing specifi cations and the But here’s an example: Sony’s U.S. patent No. providing a 25-page pdf listing by member, selling of the encryption keys that make the 5969651 for “8/16 Modulation on a Single http://www.mpegla.com/main/programs/ system work in an interactive fashion. Layer DVD-” expires on July 7, 2015, the same m2/Documents/m2-att1.pdf, hundreds Interactive meaning that any Blu-ray disc day that the company’s U.S. patents Nos. of MPEG-2 patents have already expired should work in any Blu-ray device. This 5969651 & 5818367 expire, also covering throughout the world, and some in the innovative encryption technology does rely 8/16 Modulation but for a Dual Layer DVD- U.S. claimed by Philips and Panasonic, for on patents. However, AACS also has used ROM disc. example, expired as recently as this past an innovative technique to license those April and as long ago as 2007. Interested parties can go directly to: patents. http://www.one-red.com/en/license- Similar trends are also found in the long AACS does not own rights to the patents; the programs/one-red-dvd-disc-and-dvd-player- document for VC -1 at http://www.mpegla. patents are owned by the AACS founders. license-programs/dvd-disc com/main/programs/vc1/Documents/vc- The AACS founders license the patents The patents managed by One-Red’s sister 1-att1.pdf, but the expirations are listed on directly to AACS licensees under a method page 16 of the 21-page document. organization formed to cover Blu-ray disc called “Necessary Claims.” That means the technology are mostly much newer, and That’s not to say it’s all over for patent licensees can take advantage of whatever therefore don’t expire for the most part for collection. To the contrary, as evidenced founder patents are necessary to implement another eight years or later. by the 85-page document at http:// the AACS Specifi cations within the scope www.mpegla.com/main/programs/avc/ of use defi ned in the license agreements. In However, sandwiched among the data is Documents/avc-att1.pdf containing still-in- return, the licensees agree not to take any this curio: Panasonic No. 5790487 for a Blu- eff ect patents for AVC throughout the world, actions against either the founders or any ray disc as well as recordable Blu-ray disc’s although on page 82 some in U.S. expired as other AACS licenses, again to implement the “Optical Information Recording Medium,” early as 2007. AACS Specifi cations and within the scope of which expired June 6, 2015. On the MVC attachment at page 23 of 24 use defi ned in the AACS license agreements. See the complete One-Blue list at: , the U.S. tremendous advantage for participants programs/bd-r-re/ patent (5,617,334) held by “The Trustees of in the Blu-ray ecosystem, who are AACS Columbia University in the City of New York” licensees, to know that other participants DVD FLLC expires on July 20, 2015. in the ecosystem will not take action Regarding the time left on the ubiquitous The MPEG LA spokesperson points out against them over the AACS technology. The “Necessary Claims” licensing technique, DVD logo, DVD FLLC’s Masa Saito tells that “MPEG LA is authorized to off er single Physical World: licenses for coverage under standard by its nature, implies that patents are essential patents owned by multiple not listed. And as stated previously, the “We renew our logo periodically (e.g. every patent owners as an effi cient alternative to patents are owned by the AACS Founders, fi ve years at patent and trademark offi ces in negotiating separate licenses with individual not by AACS. Therefore, AACS could not the world). So, I cannot tell how long.” patent owners. Therefore, users are free to enter into an agreement with Colonial to Saito adds that each current license negotiate with individual patent owners for license patents it does not own, and the started from Jan. 1, 2015 and expires at other alternatives.” In all cases, applicable “Necessary Claims” methodology makes it Dec. 31, 2019 for all licensees no matter royalties are payable whether one or more impossible to speculate on when any of the when they sign. patents is used, the spokesperson notes. patents may expire. P.4 Physical World Issue: 3Q15 Member News Vinyl press rebuilt by Rainbo Records Rainbo Records, now in its 76th year, rebuilt a vinyl press – its Rainbo’s vinyl presses run six days a week, 24 hours a day, daily 15th – and it’s been up and running since April. “It took about a producing 25,000 records a day. year to rebuild,” reports Rainbo president Steve Sheldon. “This is The Rainbo factory in Canoga Park, Calif., was used for the feature one of three presses that I bought in 2003 up in Canada fi lm opening in August Straight Outta Compton about rap music’s for parts, and we had pretty much stripped it bare of all golden age – the period spanning the late ’80s to the mid-’90s – parts. But thank goodness we kept the press itself and and actor Paul Giamatti took over Sheldon’ offi ce for a scene. the control panel intact,” he added.

Media-Tech Speakers Espouse – Disc Resilience in Digital Age Finding a place for physical media in the digital age dominated conference the MEDIA-TECH conference held in Hamburg in mid-May.

Approximately 100 participants from 18 countries discussed the His former DADC colleague Dieter Daum, who left the company latest industry trends in the European packaged media community. earlier this year, then presented ideas and ways to discover new Frank Hartwig, Chairman of MEDIA-TECH Association, called the business opportunities for media replicators. event “an excellent chance to discuss new market opportunities.” Sven Deutschmann, CEO of Arvato Replication, moderated a panel He cited relevant new market research presented, making it about the next generation of TV with input from Marcel Gonska, worthwhile to participate. WLC, Paul Gray, IHS, Stephan Heimbecher, SKY and Yvonne Jesper Schertiger, Executive Vice President of Sales and Marketing for Thomas, EBU. Sony DADC International, delivered the opening keynote covering Stephan Heimbecher, Director Innovations & Standards - consumer engagement with new channels across the media Technology at Sky Deutschland Fernsehen, talked about Ultra lifecycle. HD-Live-Production and demonstrated 4K. “Consumers will spend more on entertainment in the years Business consultant Hannes Treichl invited participants to a to come but unfortunately not for the traditional home journey through the world of creative thinking and innovation entertainment products,” Schertiger admitted. “By understanding with his presentation: “Thinking Diﬀ erent – how to get out of the consumer behavior and engagement during the entire life the box.” cycle of a title, this opens up great opportunities for presenting The full conference program is available at: the physical products in non-traditional home entertainment https://www.media-tech.net/europe15-hamburg/conference- window and by that grow our ‘window of opportunities’. It’s all program.html about seeing the opportunities within a challenged market and Presentations may be downloaded by using the password: start working even closer with our clients and the consumers,” the Hamburg_MTA_2015 DADC executive added. P.5 Physical World Issue: 3Q15

Industry News JVC Getting Out of PcW Forecast: Digital Music Will Blank Disc Biz Overtake CD in ’15 Globally Leading blank media supplier Victor Home video physical disc sales and Music streaming revenue is expected Advanced Media Co., Ltd. will be shutting rentals will continue to decline, to hit $1.9 billion in 2019, up from down operations by the end of the year, according to the latest report from $1.1 billion in 2014. By 2018, music the company’s parent Taiyo Yuden Co., PricewaterhouseCoopers (PwC) “Global streaming revenues are expected to Ltd. of Japan announced. In a statement Entertainment and Media Outlook surpass those from digital downloads. explaining the decision, Hiroki Okamatsu, 2015-2019.” DVD rentals’ compound Videogames will remain strong in the President and Representative Director annual growth rate (CAGR) will decrease U.S., with total U.S. gaming revenues of Victor Advanced Media Co., Ltd., said: by 14% ($730 million in revenue), while hitting nearly $19.6 billion in 2019, “Victor Advanced Media has developed DVD sell-through will see a CAGR of up from just over $15 billion in 2014. businesses centered on optical recording -8.4% ($4.54 billion) in 2019. But online, mobile and PC gaming are media. As the larger storage capacity of Over the forecast period, the sharp taking their toll on traditional consoles: hard disc drives (HDDs) and the use of cloud decline in global physical recorded Traditional gaming revenue is forecast computing is driving changing market music revenue will not be oﬀ set by to represent 79.3% of total game conditions, the market for optical media total digital recorded music revenue’s revenue in 2019, down from than the products has been diminishing. Due to growth, PwC stated. However, consumer 81% it accounted for in 2014. the decline in demand in recent years and spending on digital music formats and market outlook it has become increasingly For more info, visit: services will overtake physical in 2015, http://tinyurl.com/q3jesgk diﬃ cult to expect improvement in the the report projected. future business environment.”

Bayer Meet Global Supplier Symcom / PT&S MaterialScience At Colonial’s European meeting in May, Erik van Stiphout, General Getting Renamed Manager, Symcon BV, based in Veldhoven, The Netherlands, made a presentation regarding the overall capabilities globally of Symcom ‘Covestro’ and Process Technologies & Services (PT&S) in serving the equipment and materials needs of media manufacturers. PT&S operates an offi ce on the west coast of the U.S. Branding itself as a “one-stop supplier for optical media consumables,” Symcon / PT&S also sells and installs pre-owned equipment (and spare parts) of all kinds, such as machines for mastering & galvanics, replication lines, printing machines and packaging machines (like overwrapping), with worldwide stock (1000 m2 in The Netherlands, 3000m2 in the USA) availability and delivery. Since 1995, Symcom has focused on raw materials, chemicals and consumables for mastering & galvanics (which are proven by the OEM), replication and printing. It has also developed Eff ective, Sept., 2015, Bayer private-label chemicals and other products, and provides bonder for DVD, Blu-ray MaterialScience, a leading supplier glass masters, lacquer for CD, as well as ink and off set plates for printing. of plastics for optical media, will be separated from Bayer AG and offi cially Further they supply (aluminum and silver) sputtering targets, full service for mould renamed as Covestro. Bayer’s plan is parts (new, repair and exchange program) for all common brands. for Covestro to be traded on the stock The company’s technically skilled staff specializes in mastering, all common market as a separate company by replication lines and printing machines for as well installation and technical support. mid-2016 at the latest. Covestro will For more information, visit www.symcongroup.com continue to be a leading producer of polymers. The move will enable Bayer MaterialScience to deploy its existing strengths even more rapidly, eff ectively and fl exibly in the competitive global arena, Bayer stated. P.6 Physical World Issue: 3Q15

Master Recycling: ‘Sell Us Your Scrap Discs’ The adage “one person’s trash is another’s treasure” surely ts The Master Group’s optical disc recycling program, which has been in place for over 10 years and used by large replicators such as Cinram and Sony DADC. Now The Master Group will like to extend the program to Colonial Lalli points out that such recycling also “helps the members in North America and Europe. environment” by not having fi nished goods dumped into What Master Recycling pays for the discs depends on volume. landfi lls, and used for other purposes that require the same plastics, he adds. Europe and USA-based Master Recycling will arrange for Colonial members to pick up all their scrap discs and overages no matter The company typically recycles 500 tons of polycarbonate per where in the world. month in this manner. “We cover all the costs, and even send containers,” explains Master The certifi ed destruction process whereby all products Recycling’s Laji Lalli. If the CDs or DVDs are fully packaged, his brought into Master Recycling sites are destroyed under company arranges with other fi rms for the shrinkwrap to be surveillance in secure conditions. CD and DVD materials are removed, and the paper and plastic packaging to be separated reprocessed so that they can again be supplied to replicators from the optical discs. All of the components are then recycled allowing them a signifi cant saving on material costs. and processed to produce new plastic materials, which are then Replicators are also issued with a destruction certifi cate so supplied to its global customer base. they can claim back royalties paid.

If you’re interested in participating in Master Group’s recycling program, contact: Laji Lalli The Master Group King George’s Place, 764 Eastern Avenue Newbury Park, Essex. IG2 7HU England Tel: +44 208 865 1114 Fax: +44 208 518 4203 E mail: [email protected] Website: www.master-group.com

Classifi ed / For Sale Available: For Sale: For Sale: ECOdisc molds Guann YINN CD/DVD Appx. 3.5 million DVD 2 Axxicon CD Off set Printer Digitrays moulds. GFS-1001, 5 Color. With We can off er a special price! • Each is 120mm Harbor Chiller. ID# C-P-20-200; [email protected] STD-ECO moulds for S/N-GFS191; Year 2004. Contact: making thin discs Price: $7,500 plus shipping Laji Lalli, The Master Group • Bought new in 2010 www.master-group.com and have hardly 90-100k A-grade Viva been used. Eco cases S/N 5566 and 5567 .08 each, California pickup location. Want to move asap! [email protected] Contact: Contact: for both Guann Kalman Weber, printer & Viva cases: Charles Duplium Schredder, CD Video Manufacturing www.duplium.com [email protected] P.7 Physical World Issue: 3Q15

Recommended Reading: Let’s Get Physical Art of the Rolling Stones: Behind That Zipper and That Tongue By Larry Jaff ee http://mobile.nytimes.com/2015/06/08/arts/music/ art-of-the-rolling-stones-behind-that-zipper-and- An online study of U.S. Spotify users examined musical tastes that-tongue.html?smid=fb-share&_r=1&referrer= and concluded that people stop listening to new music at 33. My pal Craig Braun, emcee of the Alex Awards for Packaging Excellence, reveals the truth behind the “Listeners are returning to the music iconic Sticky Fingers cover. that was popular when they were coming of age – but which has since The Man Who Broke the Music Business phased out of popularity,” says the http://www.newyorker.com/magazine/2015/04/27/ study’s author Ajay Kalia of the website the-man-who-broke-the-music-business skynetandebert.com. Investigative piece delves into post-Napster piracy at a major U.S. CD replication plant. I’m fairly certain in the 24 years since I turned 33 that I’ve listened to plenty of “new music,” by which I generally Dust off the boombox, cassettes are mean artists who were at least 15 years having a comeback | The Sacramento younger than me. For example, my Bee current favorite album is by Florence + http://www.sacbee.com/entertainment/music- I remember when I bought my fi rst The Machine, just ordered the $35 vinyl news-reviews/article22245705.html?fb_action_ version after checking it out on Spotify. CD player in late 1985 and my rule ids=10153273250401278&fb_action_types=og. Of course, also I had to special order for purchasing discs was to get only shares the new two-record vinyl reissue of the new titles on the format and not stuff Cassettes: This year’s vinyl? Rolling Stones’ Sticky Fingers to balance I already owned on record. Of course, out the generation gap. within a few years I chucked that Solving The Vinyl Comeback’s Big restriction and replaced most of them Problem, One Antique Machine At Being the parent of two kids, now on CD in due time through the early A Time almost 21 and 17, has kept me current 2000s. by C.J. Janovy on pop music trends for the past Oddly enough, I bought a USB- http://www.npr.org/sections/ decade or so, but on the other hand, I therecord/2015/04/17/400364697/solving-the- equipped turntable in 2007 with the never really needed their help. I found vinyl-comebacks-big-problem-one-antique- thinking that I would “digitize” my Florence on my own a few years ago. machine-at-a-time?sc=21&f=100920965 records, plug them into the laptop’s Only a babyboomer would chuckle over Vinyl records have made a small but forceful iTunes and then burn CDs or move Facebook postings of the original cover comeback in an age dominated by digital listening the tracks over to my iPod. That plan models of the Woodstock soundtrack habits. But if there’s one problem with the vinyl didn’t go very far, and a few years later resurgence, it might be this: The machines that album and Supertramp’s Breakfast in I purged a few thousand albums and a press vinyl records are decades old, and no one’s America, and how they look now. few thousand CDs to make some money building new ones, so keeping up with increased Still there might be something to Kalia’s and downsize. demand is hard. theory, as I assess my vinyl addiction. What can I say? I’m format-agnostic. Recently I replaced once-had, used Pressed to the Edge: Why vinyl hype is There are a few thousand pre-recorded copies of, for example, The Who’s Live destroying the record cassettes in my basement too. At Leeds and Quadrophenia, the Beatles’ http://www.factmag.com/2015/05/07/pressed-to- Sgt. Pepper’s Lonely Hearts Club Band An online quiz at http://tinyurl.com/ the-edge-vinyl/ (hey, it was just the anniversary), the ngxohs2 guesses your age based on B52s’ fi rst and second albums, The your taste in music after answering a Iconic Manchester album covers - but not quite as you remember them Smiths’ and few multiple-choice questions. http://www.manchestereveningnews.co.uk/whats- New Order How did I do? Well, it was 7 years off , on/music-nightlife-news/iconic-manchester-album- debuts, and but oh, to be 50 again! And the quiz covers---9350395 obscure fare concluded my favorite hit was Bonnie like Alan Price’s Tyler’s “It’s A Heartache.” Truth be told, Mini Documentary About Heavy Metal Oh, Lucky Man! I always liked that song. Great, now I’m Covers and Performing going to have to fi nd that record too, as http://www.metalunderground.com/news/details. Price, to name I put on a Jethro Tull album. cfm?newsid=113772 a few recent purchases. The Utopia Of Records: Why Sound Archiving Is Important http://thequietus.com/articles/18004-sound-library- Colonial Purchasing Co-op Contact Info british-library

Phone: +1 747-777-2081 Email: [email protected] Web: www.colonialpurchasing.com Newsletter editor: Larry Jaﬀ ee, lsjaﬀ [email protected] P.8 Physical World Issue: 3Q15